FY 2004 How State Aid Was Determined

NH Department of Education
Division of Program Support
Bureau of Data Management

HB 608 for FY04

HB 608 for FY04 modified the Adequacy Aid formula. It also established a second, "targeted" aid distribution. Modifications to the FY03 formula are as follows:

Statewide Property Tax Rate

When enacted in 1999, the statewide property tax rate was set at $6.60 per $1,000 beginning with the 2000 tax year. For the 2002 year the rate was dropped to $5.80. HB 608 reduced the rate to $4.92 for FY04.

Transportation

The FY 03 formula allocations included 70% of the town's expenditure for all types of transportation. Federally funded expenditures were excluded. HB 608 changed this to 100% of the cost of transporting students in kindergarten through grade 8, to and from school. Excluded were transportation expenditures for high school, athletics, field trips and special education.

Average Daily Membership in Residence

Each town's ADM-R includes students that attend school in the local district, attend school in another district, or attend nonpublic special education schools. The old definition of ADM-R included students educated at home by their parents. HB 608 changed the definition of ADM-R to exclude home schooled students, but makes a special aid allocation for those students that use school services. Each home schooled student that participates in athletics or other non-academic activities is included in the student count as a 0.1. An additional 0.15 is added for each academic course.

Base Cost

The old formula set a biennium base cost every other year by analyzing the expenditures of a select pool of school districts. The pool includes those districts where 40% to 60% of the elementary students scored at the basic level or better on the state's assessment test. The base expenditure per pupil is determined for each district and the pool is sorted from high to low by expenditure per pupil. The per pupil expenditure of the lowest spending half of this pool is averaged. Since districts provide some services that go beyond the requirements for adequacy, the average base expenditure per pupil is reduced by 9.75% to arrive at the Base Cost.

HB 608 eliminated that base cost calculation formula. The base cost is updated by adjusting for the rate of inflation, as measured by the Northeast Consumer Price Index. This occurs annually, rather than every other year. Since the CPI can vary considerably from one year to the next, a four year average is used.

"Targeted" Aid

This formula distributes any level of appropriation. The bill specifies that the appropriation for this component shall be $10,000,000 for fiscal year FY04. A town's aid is based on it's ADM-R without any weighting, median family income and median owner-occupied home value as most recently published by the U.S. Census, and the most recent equalized valuation that includes utilities as published by the Department of Revenue Administration.

For each town the formula is as follows

The local tax rate that would be needed to raise an amount equal to 0.5% of the median family income when assessed upon a home of median value is determined. The town's per pupil amount is determined by applying this tax rate to the total equalized valuation and then dividing by the ADM-R.

Town aid is equal to twice the state average per pupil amount less the town's per pupil amount times the town's ADM-R.

If the appropriation is insufficient to cover the calculated aid for all towns, an adjustment percentage is applied. The adjustment percentage is applied to twice the state average per pupil amount before the local per pupil amount is subtracted. The result is again multiplied by the adjustment percentage. There is only one adjustment percentage that will result in a distribution that matches the appropriation.

Complete FY04 Formula

Total the weighted students

Elementary student = 1.0 except that Kindergarten students count as no more that 0.5

High school students = 1.2

Special Education students = an additional 1.0

Free/Reduced Meal Eligible Elementary students = an additional weight on a sliding scale of 0.0 to 1.0. Districts with an eligibility rate less than 85% of the state average = 0. Districts with an eligibility rate of 2 X state average = 1.0. A sliding scale is applied to the districts in between (rates of about 15% to 36%).

Participating home school students as described above

Determine cost of adequacy plus targeted aid

Multiply the total weighted students by the base cost.

Add transportation as described above.

Add targeted aid as described above.

Determine grant/excess

Subtract the amount raised from the statewide property tax from the cost of adequacy plus targeted aid. The result is either a grant or the excess to be remitted.